​Fixed-term contracts – On what grounds can they be renewed?

One of the subjects that has been tackled a lot in the recent news is connected to the latest decision of the Court of Justice of the European Union with regard to fixed-term contracts. According to the Court of Justice, the use of successive fixed-term contracts in order to cover a lack of permanent staff can be considered abusive and is therefore contrary to EU law. This decision could have a certain impact on the UK labour market, but it is arguable whether it will offer better protection to fixed-term workers or not.

What is a fixed-term employment contract?

A fixed-term worker is a worker who has a direct and temporary employment contract with an employer. The end of this non-standard contract is determined by objective conditions such as reaching a certain date, by finalising a certain task or by the occurrence or non-occurrence of a certain event. By contrast, a permanent worker has an employment contract of indefinite duration and even though he is going to be engaged in the same or broadly similar work, due regard will be given to qualifications or skills.

In other words, a fixed-term employment relationship is supposed to end on a certain date which is usually mentioned in the employment contract. In addition, it can also end after a specific event or as soon as a certain task is completed. For instance, a person can be employed under a fixed-term contract in order to cover an employee's maternity leave. In this situation, the fixed-term contract will end as soon as the employee who was on maternity leave returns to work.

Another example is a researcher or a specialist who is employed in order to work on a certain project. In this case, the termination of the researcher's employment contract will be strictly connected to the completion of that particular project.

It is important to note that there are certain categories of employees who, in spite of their temporary employment contracts, are still not covered by the legislation which is applicable to fixed-term employees. The excluded categories are as follows: the members of the armed forces, agency workers who are undertaking their activity through a temporary work agency, fixed-term employees who are employed under a contract of apprenticeship and employees who work under the Government training scheme.

The advantages and disadvantages of fixed-term contracts

According to Caroline de la Porte, political scientist and co-author of a working paper for the European Trade Union Institute, fixed-term contracts could increase the chances of employability of certain categories of workers. Furthermore, it also brings certain benefits to employers because they are able to coordinate the employment level in their business and they implicitly have more control over the finances of the companies.

On the other hand, having the option of a fixed-term contract, employers will tend to avoid permanent contracts as the latter ones provide a higher level of protection to workers after two years. Therefore, instead of enjoying the benefits offered by a permanent contract, workers might find themselves "trapped" in successive fixed-term employment contracts with little or no access to training and career development and with low employment security.

This has been the case with Maria Lopez, nurse and member of the occasional regulated staff at the University Hospital of Madrid.

The case of Maria Lopez – Can someone be employed under a succession of fixed-term contracts?

The case of Maria Lopez manages to provide some answers to the following questions: is it possible for an employee to work under a succession of fixed-term contracts? When can a succession of fixed-term contracts be considered abusive?

On 2009, Maria Lopez was recruited as a nurse by the University Hospital of Madrid in order to provide certain services of a temporary, auxiliary or extraordinary nature. Her employment contract was renewed seven times, being indentically worded every time. On 2013, shortly before Maria's last contract expired, she had received a notification regarding the termination of her working contract. It is worth stresing the fact that Maria had no breaks in continuity and that her employment contract was renewed every time, under the same conditions. In those circumstances, Maria Lopez brought an appeal against the notice of termination of her employment contract arguing that "her successive appointments were not intended to meet an auxiliary or extraordinary need of the health services, but corresponded in reality to a permanent activity."

In these circumstances, Court of Justice of the EU decided that the renewal of fixed-term contracts has to be justified on "objective grounds". In other words, if the aim of the renewal is to cover needs which are not temporary, auxiliary or extraordinary in nature but on the contrary, they are fixed and permanent then the measure represents an abusive behaviour of the employer.

What is the meaning of "objective grounds"?

One could argue that with this decision, in the case of Maria Lopez, fixed-term workers will receive better protection. Legal certainty is enhanced and employers will have to justify the renewal of fixed-term contracts on objective grounds.

Also, fixed-term employees have the right not to be treated less favourably than permanent employees who work for the same employer, in the same workplace and who are doing the same or a similar job. However, the employer has the possibility to justify such a difference in treatment on objective grounds.

The problem is that the applicable legislation does not provide any definition for the notion of objective grounds, leaving thus the impression that its interptetation remains at the employer's discretion.

Fortunately, fixed-term employees have the possibility to ask for a written statement from their employer as soon as they considers that their rights have been infringed. The employer will have to give an explanation with regard to that difference in treatment within 21 days from the employees' request. If the employees are still unsatisfied with the outcome, they can make a complaint in front of an Employment Tribunal within 3 months, starting with the date of the less favourable treatment.

Clapham and Collinge have a dedicated team of expert solicitors who can provide all the necessary information, support and legal advice. Contact us today on 01603 693500 or email us using the 'make an enquiry' form. Appointments are available at our Norwich, Brooke, North Walsham and Sheringham offices.